Officials looking for ways to raise billions of dollars for roads in Colorado have added to their list an increase in the state income tax and a hike in the tax on oil and gas production.
Funding to build and repair highways has continued to dwindle, prompting a Denver Regional Council of Governments task force to examine a variety of possible payment mechanisms.
Officials estimate that the Denver area will need about $13.8 billion for roads over the next 25 years, but they predict only $5.8 billion will be available.
“If you do not travel on major thoroughfares, you don’t understand the problem,” said Jefferson Economic Council president Preston Gibson, referring to congestion that will get worse as the area adds as many as 1 million residents over the next 20 years.
Increasing the tax on oil and gas production as well as the state income tax were the latest proposals considered last week.
On Friday, DRCOG manager Steve Cook told the group that raising the state income tax by 0.1 percent could generate between $2.5 billion and $3 billion over 25 years. A hike in the current 5 percent severance tax to 6 percent might raise an additional $1 billion over that period, he said. A severance-tax increase would exempt small wells.
“We are open to a modest increase” in the severance tax, said Ken Wonstolen, senior vice president of the Colorado Oil and Gas Association.
But he noted that constituencies interested in education and wildlife and open-space issues also have their eyes on oil and gas income and that Colorado’s political leadership will have to determine the priorities.
The DRCOG task force is considering other tax and fee increases to raise more money for roads. Some would require legislative action, and many would need ballot approval.
A recent boom in energy production in Colorado has sent severance-tax revenue soaring, from a little more than $30 million in 2003 to about $150 million last year.
At Friday’s meeting, Aurora City Councilman Bob Broom, a task force member, asked the group to consider a 3 percent severance-tax surcharge, largely on oil and gas, that might generate $356 million a year for transportation statewide.
Broom added that officials “don’t want to kill the golden goose,” referring to the fear that higher taxes slapped on oil and gas could discourage the initiative to drill.
Tom Norton, executive director of the Colorado Department of Transportation, told Denver-area officials on the task force that just as they jealously guard the right to control sales taxes in their cities and counties, rural officials see the severance tax as a way to pay for impacts that energy production has on their communities.
A sizable portion of severance-tax revenue is returned to local governments to mitigate such impacts. Wonstolen said the tax also helps low-income people with their heating bills.
DRCOG also is examining other sources for capital, including increases in various taxes and a controversial “vehicle miles traveled,” or VMT, fee that could charge motorists a penny for each mile they drive.
Oregon is experimenting with a program that aims to assess motorists 1.2 cents a mile in lieu of paying the state’s 24-cents-a-gallon gasoline tax. The program is controversial because it relies on Global Positioning System equipment in vehicles to track mileage.
Staff writer Jeffrey Leib can be reached at 303-954-1645 or jleib@denverpost.com.
